Report: Cisco’s aboard Intel foundry effort

It looks like Intel’s nascent foundry for building chips to third-party specifications has netted a big fish — Cisco. A Bloomberg report on Thursday cited unnamed sources saying the two companies were close to a deal.

Intel CEO Paul Otellini

In December, Intel CEO Paul Otellini said the company was open to building chips for companies that were not directly competitive with its key PC- and-server-chip business. Critics say that Intel missed an opportunity to dominate the low-power chips powering fast-selling cell phones and tablets where ARM is king. This deal, if it pans out, means Intel would build Cisco-designed chips for Cisco networking hardware and become a player in the $30 billion custom chip making business.

Intel had no comment in the Bloomberg report. A Cisco spokeswoman reaffirmed to me that Cisco and Intel have worked together for years — Cisco’s Unified Computing Systems (UCS) servers run Intel chips for example — but would not comment further. But this deal would validate the notion of Intel as a manufacturer of special-built chips to run things other than servers and PCs.

It’s interesting that Intel may now build chips to other companies’ specs. The company’s own silicon technology and designs drove the PC and laptop business pretty much from the get-go in the 1980s when Intel and its software partner Microsoft. This looks like a leader becoming a follower.